During Asian trading the gold price dropped from a three week high as investors wait nervously for news from the latest Federal Reserve meeting. The gold price retreated 0.6% to $1,264.30 per ounce.

The Federal Reserve start their latest meeting today and traders will be looking for any announcement that interest rates are to rise. Investors commonly assume rising interest rates adversely impact the gold price. The Intuition is that high interest rates will make gold less appealing when compared to interest bearing assets.

On the other hand many gold analysts believe rising interest rates will make interest payments on the U.S. national debt unaffordable and increase golds appeal.

Surprisingly the gold price fell against a back drop of escalating violence in Iraq and a drop in Asian stock markets. Gold is held as a hedge against political and economic uncertainty and analysts are predicting that the continuing violence in the Middle East will support the gold price in the short term.

Assets under management in the world’s largest gold Exchange Traded Fund, The SPDR Gold Trust dropped 4.20 tonnes to 782.88 tonnes, the largest outflow since Mid-April.

Silver fell 0.41% to $19.52 per ounce, platinum dropped 0.23% and palladium decreased 0.06% to settle at 808.03 per ounce.